Bitcoin Hashrate Plunge Sparks Contrarian Buy Signal, Says VanEck
Bitcoin's computational backbone just flashed a rare buy signal—and it's the kind Wall Street usually misses.
The Hashrate Heist
Network security just took a hit. Bitcoin's hashrate—the total processing power securing the blockchain—crashed. Miners are powering down. For most, that screams danger. For contrarians, it screams opportunity.
VanEck's analysis cuts through the noise. A plummeting hashrate historically precedes price bottoms, not tops. It's a classic shakeout: weak hands capitulate, inefficient operations get purged, and the network resets—leaner and meaner.
Reading the Tea Leaves in Silicon
This isn't about sentiment charts or Twitter hype. It's physics and economics. Lower hashrate means less mining competition. Surviving miners mint coins cheaper. The security discount gets priced in—eventually.
Traditional finance stares at volatility and sees risk. Crypto natives stare at hashrate charts and see the cost basis of the entire network shifting. One's a rearview mirror; the other's a compass.
The Contrarian's Edge
Buy when there's blood in the streets, even if it's algorithmic. The signal is clear: extreme miner distress often marks a local floor. It's a brutal, mechanical form of capitulation that bypasses emotional traders altogether.
So, while funds rebalance their quarterly reports and fret over basis points, the real signal was buried in the energy consumption of a thousand silent mining rigs. Sometimes the smartest money follows the dumbest electricity.
Hashrate dynamics and miner stress
The current environment is characterized by a “structural squeeze.” Miners are still experiencing the squeeze in terms of reduced rewards and increased network competition. Miners have had to reinvest in new equipment because the hash rate of the network has been increasing at an average of 62% since 2020. They have also been affected by the price drops, as breakeven electricity costs for 2022-generation S19 XP miners have reduced from $0.12 to $0.077 per kWh in the last twelve months.
Moreover, Chinese mining of 1.3 gigawatts is also believed to have halted due to government concern and demands for energy from AI, taking away around 10% of hash power.
Therefore, the stressful environment for miners can imply a market opportunity rather than a risk. The historic data from VanEck indicates that the more hashrates decline in the 30-day window, the more there are positive outcomes in the 90-day returns of Bitcoin.
For a more extended timeframe, the positive outcomes in Bitcoin’s returns increase when the hashrates are compressed in the 180-day window, thus averaging a gain of 72%. This WOULD mean that the current state of miner capitulation can indicate a near-term trough.
Institutional differences and investment patterns
VanEck further noted the divergent actions shown by institutional buyers. Digital Asset Treasuries (DATs) added to their positions by 42,000 BTC between mid-November and mid-December, bringing the total to 1.09 million BTC.
However, the holdings of Bitcoin exchange-traded products (ETPs) dropped by approximately 120 basis points to 1.308 million BTC. Analysts have attributed this scenario to the dynamics of valuations. Considering the fact that a large number of DATs are trading at multiples lower than the net asset value, the acquisition of funding BTC through common equity has been rendered less desirable.
Investor activity is giving mixed signals. People who held Bitcoin for one to five years have been selling, while those holding for over five years are keeping or even adding to their coins. VanEck notes that short- and medium-term holders are stepping back, but long-term believers are staying in.
Price and market implications
Bitcoin hit a low of around $80,700 on November 22, and technical indicators showed it was heavily oversold. Futures trading rates fell to 3.7–5%, suggesting traders were less eager to speculate.
Activity on the network also slowed, with daily fees dropping 14%, few new addresses being created, and mining power shrinking. Despite these short-term pressures, VanEck sees signs that the market could be preparing to recover.
A few days ago, CEO of VanEck Jan van Eck brought up long-term concerns about the encryption security of Bitcoin when future quantum computing finally comes into the picture. He cited that breakthroughs could compromise network cryptography.
Nevertheless, the support has remained for Bitcoin at this point, and investors are still positioning tactically ahead of the 2026 halving cycle. Mining was also cited by Russian authorities as one of the catalysts behind the ruble’s strength, a nod to the growing global context surrounding Bitcoin.
As of writing, according to CoinMarketCap, Bitcoin was trading at $87,877.20, down 1.04% over 24 hours, with a $36 billion trading volume.
Also Read: TRUMP Media Adds $40M in Bitcoin, Lifts Holdings Above $1B
